As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

Think Investing as Tug of War - Read more? Click and scroll down



Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Wednesday, 30 June 2010

Swiber lodges prelim offer for subsea services

By ANGELA TAN


Swiber Holdings Limited, which plans to list its subsea services business on the Catalist board of the SGX, said on Wednesday that the preliminary offer document of Kreuz Holdings Pte Ltd has been lodged with the Monetary Authority of Singapore.

The engineering group said in May that it would seek a single listing for the business currently handled by its Kreuz Subsea and Kreuz Subsea Marine units.

DBS Bank Ltd is thesponsor appointed for the proposed listing.

H1 2010 Quarterly Performance Report

Year Goal Hit Rate

Year Goal Hit Rate improved by +8.7% from 26.8% in H1 2009 to 35.5% in H1 2010.

(In 2003, I set some bullish progressive year goals from 2003 to 2011.

2010 Year Goal is 74.9% of 2009 Total Salary including all CPF contributions. Quite a big goal!)

CAGR III

LP's CAGR II

A Carpenter and his Measuring Tape

A carpenter uses his measuring tape to measure twice before he cuts his wood; but a private tutor doesn't really need to measure and has no wood to cut and he will think that why does anybody in the world need a measuring tape?

CAGR is like a measuring tape to an investor.

Why you need to measure? Measure, measure, measure - Part 2

To ease measuring: Two Bank Accounts? No, You may need Four! - Part 2

LP's little problem with CAGR

"I think cagr can be used to find out one's investing returns per year, compounded annually. However, it doesn't work if you inject or withdraw cash, affecting the initial value. I have such problems because I never did fix a investing capital and see how much it'll grow from there. I continually invest more over the years."


Injecting cash
 
CAGR isn't the actual return in reality. It's an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate.
 
Simply use "Total Invested Capital" including those cash you have injected yesterday -  anything seriously wrong with it? Do you really need to boost your ego? When investing in the stock market, it is wise to hang your ego at the door.
 
Withdrawing cash
 
When withdrawing cash, you simply treat it capital reduction. When you reduce some capital in your portfolio, you will have to similarly reduce the pro-rated Realized Profits to minimize the positive distortion in CAGR (i.e to avoid better than actual)
 
For example,
 
This is what I did when I withdrew some cash in 2009 to fund my two kids Uni expenses.
 
Total Invested Capital = $100,000; Realized Profit is $50,000
 
Capital + Realized Profit = $100,000 + $50,000 = $150,000
 
I withdrew $10,000 cash from the Portfolio.
 
$10,000/$150,000 = 6.7%
 
So I deducted 6.7% off the Capital and 6.7% off the Realized Profit.
 
After the cash withdrawal:
 
Total Invested Capital = $93,333
Realized Profit = $46,667

Tuesday, 29 June 2010

Strong interest in Keppel's K-Green Trust

SINGAPORE - Shares of K-Green Trust made a strong debut on the Singapore stock market on Tuesday, rising as high as $1.33 (US$0.96) with over eight million shares traded.
Around 0243 GMT, K-Green was traded at $1.22, 5.2 per cent higher than its implied price of $1.16.

'Investors are keen on buying the stock mostly because of its good dividend yield and long-term prospects for the green business,' said a local trader.

K-Green, which owns waste-to-energy and water treatment plants, is 49 per cent-owned by rigbuilding, engineering and property conglomerate Keppel Corp.

It made its Singapore market debut after its parent distributed 51 per cent of K-Green shares to existing Keppel shareholders. -- REUTERS

SEMBCORP TO DEVELOP A NEW INTEGRATED WASTEWATER TREATMENT FACILITY IN JURONG ISLAND’S TEMBUSU DISTRICT

- Key customer for wastewater treatment in Tembusu secured


- New facility will more than double Sembcorp’s wastewater treatment capacity on Jurong Island

SINGAPORE, June 29, 2010 – Sembcorp is pleased to announce that its utilities business has secured its first wastewater treatment customer in the new Tembusu district of Singapore’s Jurong Island petrochemical cluster. Sembcorp will provide industrial wastewater treatment services to German specialty chemicals company LANXESS’ butyl rubber facility from a new integrated industrial wastewater treatment plant to be located in Tembusu. Expected to be completed by the second quarter of 2012 at an investment cost of approximately $40 million, the new facility will more than double Sembcorp’s current industrial wastewater treatment capacity on Jurong Island, and will be sufficient to serve LANXESS as well as further customers. The facility is expected to have an initial total capacity of 9,600 cubic metres per day to serve its customers.

Commented Sembcorp Group President & CEO Mr Tang Kin Fei, “This new contract from LANXESS is yet another vote of confidence in Sembcorp as a global leader in the provision of industrial wastewater treatment solutions to serve the specialised needs of chemical and petrochemical customers.

"With Sembcorp’s expertise and strong track record of over a decade on Jurong Island, we look forward to supporting LANXESS and other customers with our effective solutions. With this new facility, Sembcorp is well-positioned to meet growing customer needs on Jurong Island.”

Sembcorp is a well-established provider of third party outsourced utilities in the Sakra and Seraya districts of Jurong Island. The company has supplied a full range of energy, water and on-site logistics and services to chemical and petrochemical manufacturers on the island for over a decade, and has the technical and operational expertise to treat multiple streams of high concentration and complex industrial wastewater.

The contract is not expected to have a material impact on the earnings per share and net tangible assets per share of Sembcorp Industries for the current financial year.

Monday, 28 June 2010

SCI - May be it is time to move up!

CapitaLand rids stake in China co for S$117 mln, to make S$33 mln net gain

By BT

CapitaLand Limited said on Monday that its subsidiary, CapitaLand (Sichuan) Holdings Pte Ltd, has sold its entire 50 per cent stake in Sichuan Zhixin CapitaLand Co, Ltd (SZC) to Chengdu Zhixin Industrial (Group) Co, Ltd. (CZI) for RMB570 million (about S$117 million) in cash.

SZC is a property development company in China. It is a joint venture between CapitaLand and CZI, which holds the remaining 50 per cent.

'The sale is part of CapitaLand Group's ongoing strategy of capital productivity,' the company said.

The sale is expected to be completed in the third quarter of 2010.

SZC will cease to be an associated company of CapitaLand and CapitaLand will recognise in its Group consolidated financial statements a net gain of about S$33 million.

SEMBCORP SIGNS MEMORANDUM OF UNDERSTANDING TO EXPAND SEAWATER DESALINATION CAPACITY IN THE UAE

SINGAPORE, June 28, 2010 - Sembcorp Industries (Sembcorp) is pleased to announce that its wholly-owned subsidiary, Sembcorp Utilities, has signed a Memorandum of Understanding (MOU) with the Abu Dhabi Water and Electricity Authority (ADWEA) in the UAE to develop and build a new seawater reverse osmosis facility with potable water production capacity of around 30 million imperial gallons per day (MIGD). When developed, the new reverse osmosis plant will enhance Sembcorp’s total seawater desalination capacity in the UAE from 100 MIGD to 130 MIGD. The new seawater reverse osmosis facility is expected to be located on the same site as the Fujairah 1 Independent Water and Power Plant (IWPP), the largest operating hybrid desalination plant in the world, owned by Emirates Sembcorp Water & Power Company. Emirates Sembcorp Water & Power Company is a joint venture between Sembcorp Gulf Holding Co and Union Power Holding Company, subsidiaries of Sembcorp Utilities and ADWEA respectively.


Expected to cost approximately US$200 million and to be operational before end 2013, the water output of the new reverse osmosis facility is expected to be sold to the Abu Dhabi Water and Electricity Company (ADWEC) under a 20-year Water Purchase Agreement. This is in addition to the 22-year Power and Water Purchase Agreement for the current water and electricity output from the Fujairah 1 IWPP to ADWEC.

Mr Tang Kin Fei, Group President & CEO of Sembcorp, said, “We are pleased to take our strong relationship with our partner ADWEA a step further with the planned development of the new reverse osmosis plant. This new development will increase our water capacity and enable us to serve the growing needs for water in the UAE.”

Besides the Fujairah 1 IWPP, Sembcorp has also established a second beachhead in the Middle East with an investment to develop, build, own and operate a combined power and desalination plant in Salalah, Oman. The Salalah plant, with a gross power capacity of 490 megawatts and a seawater desalination capacity of 15 MIGD, is expected to begin full commercial operations in the first half of 2012.

Sunday, 27 June 2010

How did you lose money in the stock market?

From my frequent visits to investment or trading blogs and forums, I have this understanding that some retail investors lost their money in the stock market due to either panic selling as they were worried that their stocks would crash to zero or they were "forced" to sell due to urgent need for money.

If you are really keen to play in the stock market, you better make sure that you will never be cornered by bad market conditions into panic or "forced" selling. Want to play, must be steady steady ones!

Property Investing - doing the Math - Part 4

Property Investing - doing the Math (Part 3)

Academician turned property millionaire

Dr Peter Yee: "My learning is that capital gain is mostly from the land. Building gives you the cash flow. Building is a deteriorated cost. It needs repair."


Yet in Singapore, some property investors are so excited over 99-year LH properties as good investment for capital gains.
 
If it is just for cash flow, is it really true that rental income is a better alternative to dividends from a well-diversified stock portfolio as passive income?
 
Passive Income - Rental vs Dividend Yield

5 Myths About ETFs - Part 4




If you look at the price volatility of STI ETF monthly chart, it can be damn scary depending when you bought it and when you need to liquidate it to meet unexpected cash expenses arising from life crisis.

It has plunged from monthly high at $3.30 in May 2008 to the monthly low at $1.60 in Feb 2009 and has since recovered to monthly close at $2.93 in Jun 2010


STI ETF is a low cost managed investment fund but it is traded like a stock.

It is volatile too!

It may cause you to lose heavily just like any individual stock when you need to liquidate it at the wrong market condition e.g. in Feb 2009.

Open your mind wide and think!


STI ETF is a low cost but not a low-risk investment and it may potentially cause you lose money when you desperately need the money.

Retirement Planning Review


Totally no draw-down method may be harder to achieve unless I strike ToTo $5M on Monday. 

Another approach is to delay the draw-down as long as possible to reduce the need to achieve higher componding returns on Portfolio B to fight inflation.

Portfolio A : Non-volatile and less volatile stock dividends to provide sustainable retirement income
Portfolio B : Volatile stocks trading to fight inflation



So I will be shifting  towards Portfolio A and Portfolio B approach.


Saturday, 26 June 2010

Uncomfortable With Draw-down Method? - 2nd Visit

http://createwealth8888.blogspot.com/2010/01/uncomfortable-with-draw-dowm-method.html

Doing the Maths for retirement without any draw-down method

For example:

We need retirement expenses of $10,000 at age 55.

Using dual portfolio strategy - Passive and Active income



Portfolio A to generate fixed passive income of $10,000 from 55 till 80 years old.

At 4% ROC, you will need 25 times the annual expenses i.e. $250,000

Portfolio B to generate active income to offset inflation from 55 till 80 years old.

See table for capital required for Portfolio B and its ROC.



Conclusion
  1. With draw-down method, you can retire with 25 times your expected annual expenses at 55
  2. With no draw-down method, you may need 30 - 32 times or even much more your expected annual expenses at 55 as compounding the portfolio returns at 8.7% - 7.2% through the next 25 years of Bull and Bear market cycle is not easy.

15 Insurance Policies You Don't Need

15 Insurance Policies You Don't Need

8. Life Insurance for Children


Life insurance is designed to provide a safety net for your heirs/dependents. Because children don't have heirs to worry about and, statistically speaking, most kids will grow up safe and healthy, most parents should not purchase life insurance for their kids. Instead, use the money that you would have spent on life insurance to fund an education plan or an individual retirement account (IRA).

Tips On Child Life Insurance - Part 4


14. Disease Insurance


Policies are available to cover cancer, heart disease and other maladies. Instead of trying to identify every possible disease that you may encounter, get a good medical coverage policy instead. This way, your medical bills will be covered regardless of the problem you face.


Critical illness insurance pays you for living - Revisit

Friday, 25 June 2010

MM Lee says S'pore banks may need to consolidate to expand overseas

DBS merges with OCBC? Since UOB is a family controlled bank so it is harder to eat up.

-----------------------------------------
By Imelda Saad

Posted: 25 June 2010 2256 hrs

SINGAPORE : Minister Mentor Lee Kuan Yew said Singapore's local banks may need to consolidate if they want to effectively expand overseas.

He said the three local lenders did not have the size to engage foreign markets in the same way that global leaders do.

Speaking at an event organised by the Association of Banks in Singapore on Friday, Mr Lee suggested that it might be better for the banks to consolidate to two, or even one entity to generate the mass required to break into foreign markets.

With opportunities in China and India opening up, and limited penetration in Southeast Asian markets, Mr Lee said local lenders needed scale.

He said: "We're in Indonesia in a small way, Malaysia in a small way, Thailand almost nothing. But the big future is in China and in India. And I don't see three banks as capable of making that foray as two banks… Just look at the capitalisation of the big banks in the US and in the UK."

So hard to sell!

Be Far Better At Selling Than At Buying? - Revisit

My colleague told me he has problem in selling. When Market is up no heart to sell and when market is down how to sell? After 10 years in the market, still like that.

I told him I have no problem in selling and the reason is so simple. I have yearly profit target to meet while he doesn't have one.  Profit can come from stock dividends or realized profit from selling stocks.

The profit target must be far above the total estimated stock dividends that can be collected in your portfolio to be effective in enforcing sell discipline.

So to be able to meet my yearly profit target, I will have to look hard at my portfolio and decide which ones to sell to realize profits and which ones to generate dividends. The unloved ones will be sold when market conditions still allow.

After selling some stocks, I will have to look again at the market to replenish the stock inventory for the next sell cycle. In this way, buy and sell cycles will come naturally as I need to meet profit target and sitting there doing nothing is not an option.

So when you really have problem in selling, try this cure - seriously set a yearly profit target for yourself and then make serious efforts to meet it.

Norit, PUB S'pore to sign water technology MOU

MOU not with Hyflux, Kep Corp and Semb Corp.  What will happen to Hyflux next week?

------------------------------------------
By ANGELA TAN


Netherland's Norit X-Flow and its local affiliate Norit Asia Pacific Pte Ltd (Norit), and PUB, Singapore's national water agency, will sign a memorandum of understanding (MOU) that outlines plans for cooperation on several water technologies.

The MOU explores possibilities for Norit Asia Pacific to develop a Norit Airlift™ Membrane BioReactor (MBR) Megablock validation plant at one of PUB's water reclamation plants. The validation plant will be the first of its kind in Asia, and only the second such system in the world.

The signing ceremony is scheduled for July 1, 2010 during the Singapore International Water week.

Hyflux - Sold $3.30, ROC 17.1%

I have finally decided to redeem my past sin in 2008 today.

Round 7: ROC 17.1%, 721 days, B $2.77 S $3.30

Thursday, 24 June 2010

Keppel secures S$50 mln marine contracts

By ANGELA TAN


Keppel Offshore & Marine Ltd's (Keppel O&M) subsidiaries in the Philippines and Singapore have clinched contracts worth about S$50 million for the construction and upgrading of vessels.

Its yards in Subic and Batangas are each constructing a transshipment barge for PT Mitra Bahtera Segarasejati and PT Pelayaran Kartika Samudra Adijaya respectively. Both vessels are targeted for completion by end 2010.

In Singapore, Keppel Singmarine Ltd has also clinched a contract from PT Indo Straits to build a similar transshipment barge that is scheduled for delivery in the first quarter of 2011.

All three barges will be deployed in Indonesian waters to load and discharge coal between vessels during open sea transshipping operations.

In addition to the above contracts, Subic Shipyard has also been awarded a drillship upgrading job by Frontier Drilling.

Inflation in Singapore stood at 3.2%

Inflation in Singapore stood at 3.2% for the second month in a row - as the increase in prices of goods and services remained at a 14-month high.

--------------------------------------------------------------

This means that your compounded returns on all your saving and investment must be more than 3.2% for this year or else you will be having negative growth.
Personal Inflation Rate and Market Inflation Rate

Wednesday, 23 June 2010

One Big Thing We Don't Know About Stocks

The New York Times

Carl Richards is a certified financial planner and the founder of Prasada Capital.


The only reason we invest in stocks is to earn more than we would get from cash or bonds. The amount you are supposed to earn by taking the additional risk of owning stocks is called the risk premium. If you don't get paid more for taking the risk, you should put your money in bonds.

Over the last 207 years you got paid 2.5 percentage points more each year (on average) to invest in stocks than you did in bonds.

But you know what they say about statistics, right? In the real world, we have to deal with the fact that like all averages, this one has some serious problems. Sometimes the risk premium is higher than 2.5%, and sometimes it goes away or is hugely negative (say, in a bear market).

Until recently, most of us thought of bear markets as those three to five year periods where you grit you teeth and hang on. But recent experience is more painful than that.

In an article by Robert Arnott in the Journal of Indexes, he highlights multiple 20, 30 and even 40 year periods where we would have been better off in bonds. In other words, the risk premium did not exist.

This starts to get ugly when we admit that we have no idea when these types of prolonged bear (or sideways) markets are coming. Where are we right now in the cycle? I have no idea, and I wouldn't bet my life savings on anyone who claims to.

So earning this mythical risk premium of 2.5% is largely a function of timing, and it's not the kind of timing we can control. This is the purely random luck kind of timing: When you were born, when you sell your business, when you retire or receive a large lump sum to invest. And if the risk premium is a function of timing, and timing is a function of luck, it doesn't take much to realize that earning the mythical risk premium is a function of pure luck, too.

This is why so many of us who have been investing for 15 years feel like we are about back where we started, even if we did everything right ( assets allocated, properly diversified, didn't bail out at the bottom and so on).

Let me clear, I am not saying that the risk premium is dead, or that we should run out and sell everything. But I am suggesting that with the Dow bouncing around 10,000, it might be time to consider what you define as long term. Ask yourself if you can you live through a prolonged period where you earn no risk premium at all, and make adjustments accordingly.

Stocks by nature are risky!

"BP stock dropped 81 cents, or 2.7 percent, to $29.52, near a 14-year-old low for the company in U.S. trading. The stocks of other companies associated with the spill remained low despite Feldman's ruling."

Deepwater Horizon accident (Black Swan event)
 
You just need one really bad incident and BP tumbled down near a 14-year-old low for the company in U.S. trading.

Nick Leeson - One Bad Guy
 
"Barings Bank (1762 to 1995) was the oldest merchant bank in London[1] until its collapse in 1995 after one of the bank's employees, Nick Leeson, lost £827 million ($1.3 billion) speculating—primarily—on futures contracts."
 
You just need one really bad Guy and a 100+ years old bank gone!
 
----------------------------------------------------
 
One lesson from here - learn to recover your initial investing capital from the market sooner the better and be safe.

Judge lifts offshore drilling ban as `overbearing'

NEW ORLEANS (AP) -- A federal judge struck down the Obama administration's six-month ban on deepwater oil drilling in the Gulf of Mexico as rash and heavy-handed Tuesday, saying the government simply assumed that because one rig exploded, the others pose an imminent danger, too.


The White House promised an immediate appeal. The Interior Department had imposed the moratorium last month in the wake of the BP disaster, halting approval of any new permits for deepwater projects and suspending drilling on 33 exploratory wells.

White House spokesman Robert Gibbs said President Barack Obama believes that until investigations can determine why the spill happened, continued deepwater drilling exposes workers and the environment to "a danger that the president does not believe we can afford."

Several companies that ferry people and supplies and provide other services to offshore rigs argued that the moratorium was arbitrarily imposed after the April 20 explosion that killed 11 workers and blew out a well 5,000 feet underwater. It has spewed anywhere from 67 million to 127 million gallons of oil.

U.S. District Judge Martin Feldman, who was appointed by President Ronald Reagan and has owned stock in a number of petroleum-related companies, sided with the plaintiffs.

"If some drilling equipment parts are flawed, is it rational to say all are?" he asked. "Are all airplanes a danger because one was? All oil tankers like Exxon Valdez? All trains? All mines? That sort of thinking seems heavy-handed, and rather overbearing."

He also warned that the shutdown would have an "immeasurable effect" on the industry, the local economy and the U.S. energy supply.

Interior Secretary Ken Salazar said in a statement late Tuesday that within the next few days he will issue a new order imposing a moratorium that eliminates any doubt it is needed and appropriate.

Feldman's ruling was welcomed by the oil and gas industry and decried by environmentalists.

Feldman's financial disclosure report for 2008, the most recent available, shows holdings in at least eight petroleum companies or funds that invest in them, including Transocean Ltd., which owned the Deepwater Horizon drilling rig that blew up. The report shows that most of his holdings were valued at less than $15,000; it did not provide specific amounts.

It was not clear whether Feldman still has any of the energy industry stocks. Recent court filings indicate he may no longer have Transocean stock. The 2008 report showed that he did not own any individual shares in big companies such as BP, which leased the rig that exploded, or ExxonMobil.

Feldman did not immediately respond to a request for more information about his current holdings.

Josh Reichert, managing director of the Pew Environment Group, said the ruling should be rescinded if the judge still has investments in companies that could benefit. "If Judge Feldman has any investments in oil and gas operators in the Gulf, it represents a flagrant conflict of interest," Reichert said.

Feldman's ruling prohibits federal officials from enforcing the moratorium until a trial is held. At least two major oil companies, Shell and Marathon, said they would wait to see how the appeals play out before resuming drilling.

In his ruling, the judge called the spill "an unprecedented, sad, ugly and inhuman disaster," but said Salazar's rationale for the moratorium "does not seem to be fact-specific and refuses to take into measure the safety records of those others in the Gulf." Feldman said he was "unable to divine or fathom a relationship between the findings and the immense scope of the moratorium."

The judge said the blanket moratorium "seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger."

The lawsuit was filed by Hornbeck Offshore Services of Covington, La. CEO Todd Hornbeck said after the ruling that he is looking forward to getting back to work. "It's the right thing for not only the industry but the country," he said.

Earlier in the day, executives at a major oil conference in London warned that the moratorium would cripple world energy supplies. Steven Newman, president and CEO of Transocean, called it unnecessary and an overreaction.

"There are things the administration could implement today that would allow the industry to go back to work tomorrow without an arbitrary six-month time limit," Newman said.

BP CEO Tony Hayward skipped the event after coming under fire for attending a yacht race in England on Saturday rather than dealing with the spill.

BP stock dropped 81 cents, or 2.7 percent, to $29.52, near a 14-year-old low for the company in U.S. trading. The stocks of other companies associated with the spill remained low despite Feldman's ruling.

The drilling moratorium was declared May 6 and originally was to last only through the month. Obama announced May 27 that he was extending it for six months.

Rep. Edward Markey, D-Mass., chairman of the Select Committee on Energy Independence and Global Warming, slammed the ruling.

"This is another bad decision in a disaster riddled with bad decisions by the oil industry," said Markey, who was at the forefront of the effort to force BP to make underwater video of the spill public. "The only thing worse than one oil spill disaster in the Gulf of Mexico would be two oil spill disasters."

In Louisiana, Gov. Bobby Jindal and corporate leaders had complained that the moratorium would cost the region thousands of lucrative jobs, most paying more than $50,000 a year.

Feldman agreed, writing: "An invalid agency decision to suspend drilling of wells in depths over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region and the critical present-day aspect of the availability of domestic energy in this country."

He said Gulf drilling accounts for 31 percent of total domestic oil production and 11 percent of domestic natural gas production, and an estimated 150,000 jobs are directly related to offshore operations.

Tim Kerner, mayor of the fishing town of Lafitte, La., cheered the ruling. "I love it. I think it's great for the jobs here and the people who depend on them," he said.

The American Petroleum Institute, one of the industry's main lobbying groups, also welcomed the decision: "With this ruling, our industry and its people can get back to work to provide Americans with the energy they need, and do it safely and without harming the environment."

In its response to the lawsuit, the Interior Department had argued the moratorium was necessary while the effort to stop the leak and clean the Gulf continues and new safety standards are developed. "A second deepwater blowout could overwhelm the efforts to respond to the current disaster," the department said.

The government also challenged contentions that the moratorium would cause long-term economic harm. There are still 3,600 oil and natural gas production platforms in the Gulf.

As Feldman was issuing his ruling, the people in charge of a $20 billion fund to compensate those whose livelihoods have been ruined by the spill were on the coast Tuesday to talk with officials about the claims process.

Kenneth Feinberg, tapped by the White House to run the fund, has pledged to speed payments to fishermen, business owners and others. He was to meet with Alabama Gov. Bob Riley.

BP claims director Darryl Willis visited a claims center in a rundown strip mall in Bayou La Batre, Ala., and said the company has already cut 37,000 checks for $118 million. Claims totaling about $600 million have been filed so far.

"Anyone who feels like they have been damaged or hurt or harmed has every right to file a claim," Willis said. "These are complicated in some cases, and in some cases they're straightforward. But every person should file their claim, and they will be looked at fairly."

Associated Press Writers Pauline Arrillaga in Lafitte, La., and Jane Wardell and Robert Barr in London, and Mitch Stacy in Bayou La Batre, Ala., contributed to this report.

Tuesday, 22 June 2010

How much debt should a company have?

Not a Dirty Word: How Companies Use Debt to Improve Their Bottom Line

Does A Highly Leveraged Man Risky To Marry?

Having an optimal balance of debt and equity can help maximise returns, enhance growth and provide a competitive edge


By EUGENE TSE AND GENEVIA WIJAYA NG

HAVE you ever wondered what level of debt your company should take on? It's a seemingly simple - but integral - question that needs to be addressed in every business. Having an optimal balance of debt and equity can help maximise returns, enhance growth and give a company a competitive edge.

Imagine a young enthusiastic entrepreneur, the owner of a fast-growing private company and the chief executive of a listed company. How do they go about getting the funds needed to finance growth? All three are open to different financing options and are going to adopt different capital structures. There are generally three stages in the life cycle of a company. And the financing available at each stage is quite different (see graph). For example, a start-up is not likely to get bank finance due to its limited cashflow track record.

There are only two generic financing options - debt and equity. Debt financing through bank loans is perhaps the most common way of raising capital. Banks charge interest and the loan is typically secured by collateral with personal and/or corporate guarantees. Sometimes, companies may also take loans from shareholders, directors or other companies.

Pros and cons of debt

Equity financing, on the other hand, is when investors inject capital into the company in return for an ownership interest in it. While equity financing is more commonly used by listed companies, private companies can use it too. Investors providing equity financing may be personal contacts of the entrepreneur - such as friends and family - or professional investors such as private equity funds and angel investors.

Debt and equity financing each have advantages and disadvantages that should be considered to match a company's needs.

The main disadvantage of traditional bank debt is that it exposes a company to insolvency risk. Banks are in the business of lending, not investing. As most people know, banks typically do not take on risk with shareholders. Banks evaluate the credit risk before approving a loan. And to further reduce their risk, they often secure the loan with collateral as well as personal guarantees from shareholders.

During an economic recession, it is not uncommon to see our fair-weather banking friends withdraw loans to protect their capital, causing companies to run into cashflow difficulties. This was what happened to quite a few companies during the recent global credit crunch. Fortunately for Singapore, the government stepped in to provide guarantees to make sure banks continued to support local companies.

With the credit crunch still fresh in people's minds, should entrepreneurs and CEOs stay away from debt completely? How much debt is too much? We will try to answer these difficult questions.

Let's start by looking at some of the advantages of debt:

It is a more affordable source of funds than equity. Increasing debt gives shareholders more capital and more capacity to generate cash flow and profits, thus increasing profit to shareholders or return on equity (ROE).

It acts as a tax shield, as interest is tax deductible while dividends are not. Debt financing can reduce a company's tax liability, which translates into a saving in real cash flow.

Because loans often come with debt covenants that companies have to adhere to or risk withdrawal of the funds, debt tends to instil discipline in a company's cash management system and its current ratios.

So if a company needs to raise, say, $5 million for expansion, should it go for debt or equity financing?

Banks are the most natural choice because they are easily accessible. If the banks reject a loan application, this suggests the company's credit risk may be too high, or the funding nature too risky - for example, overseas expansion. This is when management can approach private equity funds or angel investors. While fees and rates are higher, private equity funds will take risky investments in hope of making large upside gains.

As for 'how much debt is too much', we can refer to a study by Aswath Damodaran, Professor of Finance at New York University, as a guide. In this study, data was collected on different industries, including debt-to-equity ratio. From these 2010 statistics, the global average debt-to-equity ratio is 0.8, with the Internet software and services industry having the lowest debt-to-equity ratio of 0.028 and the banking industry having a ratio as high as 20.8. Although the ratio varies across industries, as a rule of thumb, according to the US Chamber of Commerce Small Business Nation, an acceptable debt-to-equity ratio is between 0.3 and 1.0.

Balancing of debt and equity is not a simple matter, so companies should engage professional advisers or use financial and risk models before making a decision.

Eugene Tse is a manager of corporate finance at BDO Advisory Pte Ltd and Genevia Wijaya Ng is an intern

Value has a value only if its value is valued



Imagine life as a game in which you are juggling some five balls in the air. They are WORK, FAMILY, HEALTH, FRIENDS and SPIRIT and you're keeping all of these in the air.


You will soon understand that WORK is a rubbler ball. If you drop it, it will bounce back. But the other four Balls - FAMILY, HEALTH, FRIENDS and SPIRIT - are made of glass. If you drop one of these, they will be irrevocably scuffed, marked, nicked, damaged or even shattered. They will never be the same. You must understand that and strive for it.

Work efficiently during office hours and leave on time. Give the required time to your family, friends & have proper rest. Value has a value only if its value is valued!

---30 second Speech by Bryan Dyson -Former CEO of Coca Cola

Brazil's Petrobras to invest $224 bln over five years

12 hours ago via Thomson Reuters


SAO PAULO, June 21 (Reuters) - Brazilian state oil company Petrobras  on Monday unveiled a $224 billion five-year investment plan as it pushes forward a campaign to tap billions of barrels of deep water oil reserves. (Reporting by Elzio Barreto and Guillermo Parra Bernal; Editing by John Picinich)

Monday, 21 June 2010

NOL carried 34% more containers in May

June 21, 2010, 5.37 pm (Singapore time)


SINGAPORE - Singapore's Neptune Orient Lines (NOL), the world's fifth-biggest container shipping firm, said on Monday it carried 34 per cent more containers in the four weeks to May 28 compared with a year ago.

NOL said in a statement it carried the equivalent of 212,600 40-foot containers (FEUs) on its ships in the period, up from 159,100 a year earlier, as intra-Asia and trans-Pacific trade continued to recover.

The average revenue in the period from each container rose to US$2,768, up 19 per cent from a year earlier. -- REUTERS

Sunday, 20 June 2010

K- Green (KGT) - dividend in specie to Kep Corp's shareholder

Kep Corp - Big Pay Day. Thank you!

Resulting from XE, I have decided the following book exercise to the portfolio:
  • Credited a special dividend of $0.23 per share to Kep Corp holding
  • Capitalized K-Green (KGT) holding at $1.15 per share
The net effect of this book exercise to the portfolio will see Kep Corp credited with additional 8.1% dividend yield for FY 09 and KGT will carry an investment cost at $1.15 per share.

Saturday, 19 June 2010

Dividends look safe, until they're not

Published June 19, 2010

Wealth insights
(New York)

"BP will suspend its dividends for the rest of the year and set aside money for cleanup costs and the compensation of workers who have lost income because of the oil spill."


Createwealth8888: Black Swan event can happen anytime and anywhere to any company.

The moral of the story, as always, is to diversify within each asset class you own, the more sources the better

Nothing is forever

This should have been a warning for anyone making big retirement bets on a single stock or a handful of stocks. Things that seem stable can wobble and collapse before our very eyes. And now it's happening again.

It's not supposed to work this way, at least in the minds of the many investors of the old school. To them, a stock that pays a dividend is a stock that is safe. 'It told them that a company was still around and operating, it was in good health,' said Milo M Benningfield, a San Francisco financial planner.

Just because a company pays a dividend now is no guarantee that it will forever, or that the company will even continue to exist. Nor is it any guarantee that the underlying stock is stable.

Everyone needs income in retirement, and dividends aren't a bad way to get it as long as they don't come from a single company. Again and again, we've seen out-of-nowhere scandals and crises and accidents bring big companies to their knees. Why, given the overwhelming evidence that these things do happen once in a while, would you not extract your dividend income from a low-cost, broadly diversified mutual fund that specialises in dividends?

The moral of the story, as always, is to diversify within each asset class you own, whether it's dividend-paying stocks or municipal bonds or the emerging-market countries where you're rolling the dice in search of big gains. Then, diversify your retirement income strategy, too. The more sources the better, whether it's dividend income, interest income, annuity income, rental income or periodic (and tax-savvy) outright sales of stocks or other assets.

Even this sort of diversification might not have protected you from the pain in 2008. But it can shield you from the ruin of betting too heavily on a single security like BP

----------------------------------------

Createwealth8888: When you realize that dividends don't look safe anymore; it is often too late to do anything as the stock price may have plunged far below your initial purchase.

Good deals with high returns will never come to retail investors.

The main purpose of any investment product is to raise fund to meet the investment objective.

So whenever there are good deals with good returns; private bankers, investment managers, deal-makers, private-equities and specialists everywhere will be fighting among themselves and rushing to their rich clients to offer them and they will have no problem in raising the required fund.

These investment managers are well aware of the consequences of selling to the rich clients misrepresented bad deals!

Only for deals that may turn potentially bad or negative that these investment managers will have no other choices but to spend time and efforts to organize road-shows to sell them to retail investors e.g land banking, oilpods, etc. 

This is common sense in the investment domain. The rich clients are given first right of refusal for any investment opportunities. Why retail investors don't seem to understand it? 

Good deals with high returns will never come to retail investors.


Avoid any investment products that promise high returns; 
but are sold to retail investors.



Avoid them or else you may get roasted!



Thursday, 17 June 2010

PUB to unveil new water targets and strategy

Createwealth8888:

How will the new water targets and strategy benefit Hyflux, Kep Corp and Semb Corp?

----------------------------------

NATIONAL water agency PUB will release a new document on the island's water management strategy during this month's Singapore International Water Week (SIWW).

The agency will also spell out its long-term plans to increase water supply to meet demand for the next 50 years during the event, which will take place from June 28 to July 2.

Giving a sneak peek of what can be expected at the annual event, SIWW's organisers said more than 20 new products and technologies will be unveiled.

The event aims to leverage on Singapore's position as a 'hydro hub' and use its urban water management experience to 'bring together the entire water world'.

It is also a key platform for companies in the sector to reach agreements to enhance research and development programmes.

Sgapore is looking to grow its environment and water sector, which is expected to contribute $1.7 billion in economic value- add by 2015 and employ some 11,000 people.

In 2006, the government set aside $330 million over a five-year period to boost the development of the local environment and water industry. About 60 per cent of the funds have already been used to build R&D and manpower capabilities.



The number of water companies here has climbed from 50 in 2006 to more than 70 now. And these companies have secured $7.7 billion worth of overseas projects since 2006 - up from just $683 million from 2004 to 2006.

Wednesday, 16 June 2010

Water Week organisers expect robust growth for Singapore's water industry

Will Hyflux announce good new?

------------------------------------

By S Ramesh

Posted: 16 June 2010 1629 hrs

SINGAPORE: Singapore's water industry will continue to enjoy robust growth in the years ahead, say organisers of the Singapore International Water Week (SIWW) from June 28 to July 2.

The event will serve as a launch pad for 20 innovation products and technologies.

10 countries will be taking part in the conference and expo for the first time.

More than 500 companies are also taking part in the Water Expo and several Memorandums of Understanding (MOU) are expected to be signed on the sidelines of the event.

Organisers say the total value of the agreements and MOUs would be known at the end of the conference.

Giving an update on the SIWW, its managing director, Michael Toh Kim Hock says a key aspect is the first-ever Asia-Pacific Water Minister's Forum, where 13 ministers are coming together to discuss the challenges that the water industries in their countries face.


Mr Toh adds that Singapore is now recognised as a global hydro-hub, with a thriving water industry eco-system.

The city is now home to more than 70 water companies.

Economics Development Board says by 2015, the environment and water sector is expected to contribute $1.7 billion to the country's gross domestic product and employ some 11,000 people with the majority in the professional and skilled categories. -

"I'll Play the Stock Market."

by Neil Parmar



Strangely enough, research says that when it comes to making smart financial decisions, the odds are actually stacked in midlifers'favor. Last year a study published in Brookings Papers on Economic Activity looked at how people make money-related mistakes throughout their lives. Its conclusion? The best decisions occur in middle age—peaking around 53—when experience lends financial wisdom but analytical abilities have not yet been impaired by advancing age.


-------------------------------------

Createwealth8888:

Let someone started playing in the stock market when they were in their 30s and by the time when they are in their 50s they have came across a few Bull and Bear market cycles and will be more experiences in playing the stock market.

Tuesday, 15 June 2010

The 11-Year Itch: Still Stuck at Dow 10000

by Jason Zweig

Monday, June 14, 2010

Will Dow 10000 turn out to be a long replay of Dow 1000?

Last week, the Dow Jones Industrial Average rose above 10000—again. Since March 16, 1999, when it first touched 10000 in intraday trading, the Dow has bounced over that threshold and back 63 times. This Friday, the index closed 219.6 points below where it stood exactly 11 years ago.

This isn't the first time stocks have been stuck on a seemingly endless pogo-stick ride. On Jan. 18, 1966, the Dow hit an intraday high of 1000.50. It broke through the four-digit barrier three more times that January and February, then faded. The Dow cracked 1000 again in 1972 and 1976, then fell back both times. Not until December 1982 did the Dow finally hurdle above 1000 and stay there.

Wall Street veterans even coined a term for the market's behavior: "quadraphobia," or the fear of a four-digit closing value for the Dow.

Of course, financial history doesn't repeat itself—and even when it rhymes, the sounds can be almost unrecognizable. Inflation, at roughly 7% annually, was much higher from 1966 to 1982 than it is today, devouring all the return on stocks. And during the 1970s, according to an analysis for The Wall Street Journal by Wharton Research Data Services at the University of Pennsylvania, the Dow captured only about 15% of the total value of U.S. stocks, versus 30% today.

Still, a look back at Dow 1000 may still help us think a little more clearly about Dow 10000.

During the bull market of 1982 through 1999 that separated the two periods, computers and the Internet took off and interest rates fell. Those forces lowered the cost of research and development, enabling U.S. companies to innovate at a remarkable rate.

But, the Wharton research shows, the periods before and after that—Dow 1000 and Dow 10000—feature falling rates of corporate investment in innovation. During the Dow 1000 period, the stock market stagnated because the economy and most businesses were stagnating, too.

Yet investors, spoiled by the strong growth of the 1950s, had driven stock prices up to 18 times earnings at the beginning of Dow 1000. Likewise, in 1999, as the Dow crossed 10000, the price/earnings ratio of the market rose above 33—double its long-term average. High expectations are one of the main foundations of low returns.

Investors need to remember that stock markets can go nowhere for ages, as they did in the U.S. from 1929 to the end of World War II, in Germany from 1900 through 1957, and in Japan since 1989. In my view, it is likely that U.S. stocks and bonds will underperform their long-term average returns for years to come.

But as likely as that scenario is, it is far from certain.

Just when almost everyone had concluded that Treasury bonds had to lose value, they gained 3% in the past month alone.

And back in 1982, just as the index lifted its head above 1000, the Dow had plenty of doubters. One told the Journal, "Investors have begun a state of euphoria and complacency." Another dismissed "the likelihood of a sustained recovery any time in the foreseeable future."

While it could be years before the Dow rises durably past 10000, no one will see it coming when it comes. So, just as I wouldn't advise anyone to be 100% in stocks, I wouldn't advise most people to have 0% either. And I think it is imperative to have a third to half of your stock money outside the U.S., where other markets—and currencies—may do better.

In November 1963, with the Dow at 740, the great investor Benjamin Graham declared that "in my nearly 50 years of experience in Wall Street, I've found that I know less and less about what the stock market is going to do but I know more and more about what investors ought to do."

Graham went on to counsel that investors should never have less than 25% or more than 75% of their money in the stock market—and that they should move toward the maximum as the market falls and toward the minimum as it rises. In late 1964, with the Dow just below 900, he advised keeping no more than 50% in stocks, and he reiterated that sentiment eight years later. My hunch is that he would probably say much the same around Dow 10000 as he did around Dow 1000.

Live within your means

Indebtedness itself will never kill!

Live within your means

Many people can easily understand and know it is wiser for them to live within their means and not to over spend and get themselves into debts.

Invest within your means

But fewer people will understand that it is not foolish to invest within your means. Investing within your means will enable you to sleep soundly at nights through every market and economics cycles.

Always remember this. Leverages is a double-sword and it can also kill. But, leverage may not kill them if they have Bank Of Papa or Bank of Mama to rescue them.

When you look up and don't see Bank of PaPa or Bank of Mama smiling at you; but only see open palms and when you look down and see only open mouths; then you better listen to this wise guy.

"Do or do not. There is no try." - Master Yoda

Monday, 14 June 2010

Noble invests in palm oil origination in Indonesia

Noble Group (SGX: N21), a global supplier of agricultural, energy, metals and mineral products, has acquired a 51% stake in PT. Henrison Inti Persada ("Company"). The Company intends to develop approximately 32,500 ha of land for palm oil production in Sorong Regency, West Papua Province, Indonesia.

The transaction is Noble’s first project in the oil palm sector and establishes a strong platform for the Group to expand and increase its investments in this area in the future. The investment enables Noble to expand its edible oil supply chain and secure a continuous flow of crude palm oil.

The Company is to be registered as a member of the Roundtable on Sustainable Palm Oil (“RSPO”). The RSPO are an organisation whose membership is made up of, amongst others, palm growers, palm oil producers, retailers, investors in the sector and environmental/conservation NGOs. The RSPO promotes the production of palm oil in a sustainable manner based on economic, social and environmental criteria.

“We focus our investments on areas that are synergistic with our businesses both in terms of product and geography,” said Noble Group Executive Chairman Richard Elman. “This move into palm oil plantations will complement our global agriculture and energy businesses. Our operating experience in Indonesia should prove to be an asset in helping us manage this and future projects.” He added, “With increasing convergence between agriculture and energy, this investment is a clean fit for the Group’s diversified portfolio.”

Sunday, 13 June 2010

Portfolio Management - Asset Allocation, Diversification, and Rebalancing - Part 2

Portfolio Management - Asset Allocation, Diversification, and Rebalancing

CPF Special Account

For old age, contingency purposes and investment in retirement-related financial products.

Q: What is the maximum amount I can transfer from my Ordinary Account (OA) to my Special Account (SA)?


A: You can transfer any amount, and as often as you like. However, the total savings in your Special Account, inclusive of the amount withdrawn under the CPF Investment Scheme - Special Account (CPFIS-SA), should not exceed the prevailing CPF Minimum Sum after the transferread more ..


I top up my SA to the Max

Three Little Pigs In The Stock Market - Part 3

 
Sound foolish since I am always talking about market, investing and returns. The returns on CPF SA is only at 4% per annum. It doesn't seem good and barely beats inflation rate but it is still safe.

This is part of overall asset allocation strategy since I don't have bonds in my portfolio so CPF OA and CPF is more or less bonds-like in my asset allocation.
 
When it comes to asset allocation, don't be the 4th Little Pig - always thinking of making even more money.


 
 
 
 

Three Little Pigs In The Stock Market - Part 3







We often hear this:

"Bull makes money. Bear makes money. Pig got killed!"

The story of  the 4th Little Pig who got killed was not widely told.


Bull is greedy to make money. Bear is greedy to make money. But Pig is even more greedy and always trying harder to make even more money.

Pig doesn't born on its own. Pig is a transformation from a Bull or Bear. When a Bull or a Bear becomes overly greedy and wants to make even more money; it transforms to a Pig when the overly greedy Bull or Bear begins to lose even more money.

Who is the 4th Little Pig?

The Piggy Couple or the Piggy Family


The Couple (Husband and Wife) and The Family (Father, Mother, and Children) all jump into the same investment product or stock because one of them believes he or she is a savvy investor and becomes a babe magnet to other family members.

A Pig is born when they begin to lose money and the whole family begins to suffer and everyone in the family looks at each other and wondering who else in the family is safe.


The Piggy Good Value

The stock price plunges further and dividend yield surges up. It has become even more attractive and the investor keeps averaging down and has little or no concerns of portfolio being over-exposed to this stock. The truth is Bear Market may seldom last very long but for individual stock it can remain low for years or even decades through the next Bull or Bear cycles. Don't ever mistaken the past dividends as how your future passive incomes will be like.

When the stock price plunges even further and now more money is lost and  the Good Value Bull has transformed into a Piggy Good Value. 

Cow becomes Pig

It is great to leverage and make even more money than one using only his or her limited resources.

Why does leverage work? 

At its heart, you are borrowing someone’s assets and reaping the benefits. It’s like borrowing a cow and selling the milk! What a great idea!

Don't worry. I have a great and carefully thought of plan. It will works! Nobody would like to stop and believe that Murphy Law and Black Swan will happen to them. These will happen to others but not me!


It’s great until the cow runs off. Now you’re stuck — you owe a cow and don’t have one to return. The risk of leverage is investing that debt and losing what you borrowed, which can wipe out any profits. This is when a Cow turns into a Pig.

So there is some truth in the common hearing:

"Bull makes money. Bear makes money. Pig got killed!"


So it doesn't matter if you are a bull or a bear but don't ever transform yourself into a Pig!

Saturday, 12 June 2010

Indebtedness itself will never kill

To a trader, leverage itself will not have enough destructive power to kill him. It is always a series of serious draw-downs and coupled with leverage that sent the trader to his financial agony and doom.

Similarly, indebtedness itself seldom forces the borrower into financial nightmare or doom. It is always a series of unexpected financial expenses due to life crisis or sudden unexpected stoppage of incomes and coupled with high debts that kills.

How many of us will ever stop to think seriously that bad things can happen unexpectedly and will put a stop to our dreams.

debt-free — and that, to me, is richness enough

My No Leverage Principle- Why? Part 3

Semb Corp - Potentially the next Big Water Play


Downside may be limited

Friday, 11 June 2010

STI - Nice recovery but must stay above 2800 next week.

Straits Times 2,796.29 +16.71 +0.60%



Singapore shares closed stronger on Thursday with the blue-chip Straits Times Index up 33.78 points to 2,779.58.

Volume was 938 million shares worth $803 million.

Gainers led losers 230 to 165.


Beware of Averaging Down!


Why I Don't Average Down?

Value investors or value-minded retail investors love to catch a falling knife as dividend yield surge far above their desired dividend yield.

Averaging down simply means you are taking more risks than you have initially planned for otherwise you could got into a bigger position long before this falling knife happened.

Just remember this: All stocks by nature are risky. Think of risks before dreaming of your paper profits!

You think you can analyze your company upside down and inside out; but beware of Black Swan event happening. Good luck to you!

Tuesday, 8 June 2010

OLAM INTERNATIONAL TO ACQUIRE DEHYDRATED AND VEGETABLE

Singapore, June 8, 2010 – Olam International Limited (“Olam” or “the Company”), a leading global, integrated supply chain manager and processor of agricultural products and food ingredients, today announced that the Company will acquire the dehydrated and vegetable products business and operating assets of Gilroy Foods & Flavors (“Gilroy”) from ConAgra Foods, Inc. (“ConAgra Foods”), including its dehydrated onion, garlic, capsicum, Controlled Moisture™ vegetables, GardenFrost® purees RediMadeTM shelf-stable purees and fresh vegetable operations, for a total cash consideration of US$250 million, subject to final working capital adjustments at closing.

The completion of this transaction is expected in 30 to 60 days, subject to satisfaction of customary closing conditions, including normal regulatory approvals. As part of this acquisition, Olam has entered into a long term supply agreement to cater to ConAgra Foods’ ongoing requirements for dehydrated vegetable products.

Gilroy has a long history and strong track record of operations for more than 50 years and is one of North America’s largest processors of onion, garlic, capsicum and other speciality vegetable products. It is regarded by the food industry as a global leader in this business. Its high solid seed development programme is considered to be the industry benchmark and provides it significant competitive advantage on account of its
relatively higher yields and therefore lower cost position. The breeding of high solid onions is a path dependent process and it will take several years for new entrants to catch up.

Olam’s Executive Director Shekhar Anantharaman said: “This transaction is a good example of our focused corporate strategy to build leadership in selective value chain adjacencies through investments in upstream and midstream assets. Apart from helping us build an integrated leadership position in the Spices & Dehydrates portfolio, it will also help us raise our overall portfolio margins.”

Monday, 7 June 2010

Sunday, 6 June 2010

Scrip Dividend or Cash?

Unfortunately, SGX board lot is 1,000 shares and that makes scrip dividend unattractive to small retailers who will end up with odd lots if they opt for scrip dividend.

Actually, scrip dividend is a good way for long-term investors to automatically reinvest their dividends and grow their wealth together with their beloved companies.

So when will SGX Management wake up their ideas to change the board lot to one share? Bum!

Saturday, 5 June 2010

Fundamental or Technical Analysis? - Revisit 2

Fundamental or Technical Analysis? - Revisit

"Much of technical analysis is magical mumbo-jumbo that people think will tell them where the markets going. And it never will. It's just a bunch of nonsense. Unfortunately, I've also participated in it" - Larry Williams


Who is Larry Williams?
 
He is the author of nine books, and his latest book, The Mount Sinai Myth, is based on an archeological search for Mt. Sinai in Egypt, was later featured in Vanity Fair in a re-write by Howard Blum.[1] Royalties from his books go to a scholarship at the University of Oregon in honor of his college professor, Max Wales

Williams has created several market indicators including Williams %R, The Ultimate Oscillator and value measurements for commodity prices. He was the first recipient of Trade Stations Life Time Achievement Award. Williams won the 1987 World Cup Championship of Futures Trading from the Robbins Trading Company were he turned $10,000 to over $1,100,000 (11,376%) in a 12 month competition with real money. Ten Years later his daughter Michelle won the same contest

K-Green Trust

Keppel Corporation will distribute the KGT Units by way of a dividend in specie to Shareholders.

Keppel Corporation will distribute up to 325,900,000 Units (or approximately 51.0%) of the total number of Units in KGT in issue immediately prior to the Listing, Keppel Integrated Engineering Limited, the Sponsor of KGT and the environmental engineering division of Keppel Corporation, will retain approximately 49.0% of the KGT Units immediately prior to the Listing.

KGT’s initial portfolio will comprise Senoko Waste-to-Energy Plant, Keppel Seghers Tuas Waste-to-Energy Plant and Ulu Pandan NEWater Plant.

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Createwealth8888:

What is there for current Kep Corp's shareholders?

Since it is distributed by way of a dividend in specie to Shareholders and that means a fair level playing field for retail shareholders at the time of listing. The supply of K-Green in the market will be limited and that will provide a good support.

A debt free company. Don't you like it?

I am holding on to the distributed K-Green for compounding effect and for pasive income from dividends.

----------------------------------------------------

Lim & Tan Securities


Based on projected distribution of 3.91 cents for 6 months and 2 days in 2010, and 7.82 cents for FY10, 11, the yield at $1.13 would be 6.82% (annualized) and 6.95% respectively. As a comparison, City Spring offers a trading yield of 7% at 60 cents (DPU of 4.2 cents). Note however two key differences between the two:

KGT is Singapore-centric whereas 50% of City Spring is accounted for by Basslink in Australia;

KGT is debt free vs City Spring’s high gearing, which has implications for KGT’s growth strategy going forward.

We believe KGT is attractive. KGT’s listing is expected at end June, and results from the distribution-in-specie by Keppel Corp on the basis of 1 KGT unit for every 5 Kep C shares, valued at 22.6 cents per Kep C share.)

Kim Eng Securities

The listing price for Keppel Corp’s Keppel Green Trust (KGT) has been set at $1.13 per unit. Keppel projects a DPU of 3.91 cts for the remainder of FY10and 7.82 cts for FY11. This generates a yield of 6.82% in FY10 (annualised) and 6.95% in FY11. We see fair value of KGT at $1.53, with the implied yield of 5% derived from a highly stable cash flow.
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